That reassuring corporate attorney who asked you a few questions may turn out to be the long arm of the law.
The U.S. Supreme Court’s decision in May overturning the conviction of Arthur Andersen came too late to save the accounting firm, of course, but the legacy of Andersen and its collapse lives on among fearful corporate executives and tough-talking prosecutors. Accused of illegally shredding documents in the Enron accounting scandal, Andersen maintained its innocence–and got hit with a criminal indictment that drove away its image-conscious customers.
The lesson for corporations: If you play tough with us, we indict you–and then you’re dead. So now companies are cooperating with government investigators at the mere threat of indictment, handing over internal documents, waiving the privilege that normally shields attorney-client communications and ratting out individual employees as targets for prosecution.
Shed no tears over corporate miscreants, of whom lately there have been many. “The notion that a company should sit and protect corporate employees who engaged in wrongdoing is patently absurd,” says Robert Giuffra, a white-collar-criminal lawyer.
But is it possible that companies are ceding too much power to prosecutors in order to avoid indictments–and shortchanging employees’ rights? “There was a time when companies would try to step up to the plate, even try to take a guilty plea to protect their individual employees,” says N. Richard Janis, a former assistant U.S. Attorney in Washington, D.C. “Now it’s just the opposite.”
Time Warner, Merrill Lynch, Computer Associates and Monsanto are among the big companies that have cut so-called deferred prosecution agreements with prosecutors. Under these deals the corporation agrees to turn over to the government whatever it wants, often including communications between lawyers and the executives who hired them. In exchange the government agrees to delay, and ultimately drop, charges.